- Rebate through rebate in tax on income up to 5 lakhs, but required to file returns
- A standard deduction can increase from 50 thousand rupees to 60 thousand rupees
The budget is expected to get the highest income tax relief this year. In view of the decline in GDP growth, the government reduced corporate tax in September, since then expectations of personal income tax cuts have increased. In some reports, it was said that the income tax exemption limit could be increased from the current Rs 2.5 lakh to Rs 5 lakh or Rs 7 lakh. However, as the budget time draws closer, it is now being said that the government may not increase the exemption due to falling behind the target of tax collection, but may make such changes in tax rates that provide relief to the lower and middle-income people. One of these measures is to reduce the tax rate on income from 5 lakh to 10 lakh rupees from 20% to 10%.
THE TAX RATE TO REDUCE ON INCOME FROM 5 LAKH TO 10 LAKH RUPEES FROM 20% TO 10%
Doing so will benefit around 1.5 crore, individual taxpayers. For the financial year, 2017-18 (the assessment year 2018-19) 5 crore 52 lakh 60 thousand 219 returns filed in the individual category. Out of these, 27% i.e. 1 crore 47 lakh 54 thousand 245 people were having income from 5 lakh rupees to 10 lakhs.
FULL REBATE THROUGH REBATE IN TAX ON INCOME UP TO 5 LAKHS
According to the announcement of the interim budget last year, income up to Rs 5 lakh is tax-free. However, this rebate will be available through a rebate. That is if your income is more than 2.5 lakh rupees, then the return will have to be paid, it is a different thing that rebates will be available in the tax on income above Rs 2.5 lakh and up to Rs 5 lakh. This time the discussion is also that the income up to 5 lakhs can be completely tax-free in the budget. If this happens, the people of such income will not need to file the returns from next year.
TASK FORCE RECOMMENDATION: 20% TAX ON INCOME FROM 10 LAKH TO 20 LAKH
The task force formed in November 2017 to draft the new direct tax law submitted its report to the government on 19 August 2019. The government may also consider the task force’s report in the budget. However, the government has not made public the recommendations of the task force.
RECOMMENDATION TO INCREASE THE STANDARD DEDUCTION TO 60 THOUSAND RUPEES
The task force has also suggested raising the tax exemption limit from Rs 5 lakh to Rs 6.5 lakh. Apart from this, the standard deduction asked to increase from the current 50,000 to 60,000 rupees. These changes in the tax system may cost the government more than Rs 30,000 crore.
Source: Khulasa News